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Idaho budget committee adopts lower revenue figure

by John Miller
| February 12, 2010 11:00 PM

BOISE - Idaho agencies should brace for deeper cuts this year and next after legislative budget writers took a more pessimistic view of tax revenue over the next 18 months than Gov. Butch Otter predicted just a month ago.

A divided Joint Finance-Appropriations Committee Friday agreed to set Idaho's fiscal year 2010 budget based on a forecast of $2.28 billion in tax revenue, $69 million below Otter's original proposal.

For 2011, it agreed to a target of $2.29 billion, $59 million under the governor's January recommendation.

The panel's 16 Republicans backed the lower figures; all four Democrats objected.

The numbers match those recommended by a legislative committee Jan. 20 and come after Idaho tax revenue missed targets by $25 million in December and January. Even Otter now agrees with more pessimistic GOP lawmakers: A reduced figure is more prudent, on concern an economic recovery will take longer than people hope.

"We're not out of this mess by a long shot," said Sen. Jeff Siddoway, R-Terreton, said during Friday's hearing. "We've got to deal with what we've got."

For perspective, Idaho tax revenue before the economy melted down was $2.91 billion in 2008 - $630 million more than what's now expected for the year through June 30.

The role of Mike Ferguson, Otter's chief economist, in this debate came up repeatedly Friday.

Ferguson has said two months of lower collections could be an anomaly driven by federal tax code changes that reduced the incentive of some people to make payments by Dec. 31.

He expects ensuing payments later in the year to be larger, helping to erase the two-month deficit, and said this week he sees no reason to abandon his earlier forecast.

Minority Democrats on the budget panel concluded it was wisest to stick to this assessment, rather than succumb to fears of the worst.

"Our economist tells us as he studies these numbers and these trends, he sees no reason to change his forecast," said Rep. Shirley Ringo, D-Moscow. "I believe by projecting too low today, we will impede an economic recovery."

Her argument didn't stand a chance, given Otter has also distanced himself from Ferguson.

Wayne Hammon, the governor's budget chief, told reporters Wednesday he was growing more convinced with every passing week - and every missed target - that lower revenue estimates for the rest of 2010 and 2011 made the most sense.

Republicans on Joint Finance-Appropriations Committee argued that adopting a "realistic" target upon which to budget would help state agencies make cuts now, rather than set Idaho on a course to repeat a series of midyear holdbacks Otter has ordered during each of the last two fiscal years to meet the state Constitution's mandate of a balanced budget.

Sen. Dean Cameron, R-Rupert, said Idaho's unemployed number nearly 70,000, foreclosures remain at record levels, commercial real estate owners are teetering on the brink and more Idaho banks are expected to fail in coming months. That's not a recipe for recovery.

"We can politicize this all we want," said Cameron, co-chair of the budget panel. "That's not going to help us."

Sen. Dean Mortimer, R-Idaho Falls, added he wasn't convinced the committee's final figure was conservative enough.

"It's going to take every bit of our savings and maybe more to get out of fiscal year 2010," he said. "I hope that's not the case. But I believe that's the case."